origins of NAFTA

Canada and the United States have always been economically close. Even before either nation had gained its independence, certain trade links had already been established. The ties, between the U.S and Mexico have also historically been strong, if not sometimes troubled. These links along with the emergence of the U.S as a global hegemon and economic super-power formed the base of the ground breaking 1994 North American Free Trade Agreement (NAFTA).
Many arguments have been put forward as to why NAFTA emerged as it did. In order to better understand what took place, a brief historical overview is required.
While Canada and the U.S have always been close, it was not until the mid-eighties that both governments came to the conclusion that freer market access and fewer protectionist policies could be mutually beneficial. Canada, being a small economy with abundant resources, had been slowly shifting its trade focus away from internally focused Europe and U.K to the monstrous American market. Realizing that on their current path, freer access was vital; talks were initiated through a GATT (General Agreement on Tariffs and Trade) framework in an effort to establish a Canada-U.S free trade agreement. They were successful and the CUSFTA was implemented in 1989.
During the early eighties, Mexico underwent an intense, inflationary period. Through some innovative fiscal policy, foreign aid and its eventual inclusion into GATT Mexico was able to regain control of its economy and was even touted as "one of the bright stars of the developing world" (Clement 1999, 7). In 1990, after completing an extensive trade mission to Europe, Mexican president Salinas concluded that any available capital he had hoped to attract to Mexico would undoubtedly be used either integrating and democratizing the former eastern bloc countries or on other European nations due to their increasingly integrated and inward facing market. Upon this conclusion, t…

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